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COMPANY CONFIDENTIAL
2017 Thomson Reuters Legal Executive Institute Annual Marketing and Business Development Benchmarking Survey
Introduction
Background and Objectives
• The Thomson Reuters Legal Executive Institute hosts the annual Marketing
Partner Forum, which targets legal marketing and business development
professionals. As part of this forum, a presentation is given showing legal
industry trends for marketing (MKTG) and business development (BD).
Methodology and Respondents
• An online survey was conducted in November 2016. Respondents included
marketing and/or business development leaders primarily from medium and
large firms.
• Most respondents had senior roles, reported to the managing
partner/chairman or COO, and earned $100K to $350K.
• For their participation, respondents will receive a copy of the presentation.
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Industry Context
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-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
Q1
'07
2 3 4 Q1
'08
2 3 4 Q1
'09
2 3 4 Q1
'10
2 3 4 Q1
'11
2 3 4 Q1
'12
2 3 4 Q1
'13
2 3 4 Q1
'14
2 3 4 Q1
'15
2 3 4 Q1
'16
2 3Oct+
Nov
Y/Y Change
Demand for Law Firm Services
All timekeepers
Billable time type; non-contingent matters Source: Thomson Reuters Peer Monitor
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Q1'07
2 3 4 Q1'08
2 3 4 Q1'09
2 3 4 Q1'10
2 3 4 Q1'11
2 3 4 Q1'12
2 3 4 Q1'13
2 3 4 Q1'14
2 3 4 Q1'15
2 3 4 Q1'16
2 3Oct+Nov
Y/Y Change
Litigation Transactional
Demand for Law Firm Services: Litigation vs. Transactional
All timekeepers
Billable time type; non-contingent matters Source: Thomson Reuters Peer Monitor
$300
$325
$350
$375
$400
$425
$450
$475
$500
$525
Q1'07
2 3 4 Q1'08
2 3 4 Q1'09
2 3 4 Q1'10
2 3 4 Q1'11
2 3 4 Q1'12
2 3 4 Q1'13
2 3 4 Q1'14
2 3 4 Q1'15
2 3 4 Q1'16
2 3Oct+Nov
Standard Worked Billed Collected
Hourly Rates
Lawyers
Billable time type; non-contingent matters Source: Thomson Reuters Peer Monitor
80%
81%
82%
83%
84%
85%
86%
87%
88%
89%
90%
91%
92%
93%
94%
95%
Q1'07
2 3 4 Q1'08
2 3 4 Q1'09
2 3 4 Q1'10
2 3 4 Q1'11
2 3 4 Q1'12
2 3 4 Q1'13
2 3 4 Q1'14
2 3 4 Q1'15
2 3 4 Q1'16
2 3Oct+Nov
Am Law 100 Am Law Second 100 Midsize
Lawyers
Billable time type; non-contingent matters
Realization (Standard Value)
Source: Thomson Reuters Peer Monitor
Realization (Worked Value)
85%
86%
87%
88%
89%
90%
91%
92%
93%
94%
95%
Q1'07
2 3 4 Q1'08
2 3 4 Q1'09
2 3 4 Q1'10
2 3 4 Q1'11
2 3 4 Q1'12
2 3 4 Q1'13
2 3 4 Q1'14
2 3 4 Q1'15
2 3 4 Q1'16
2 3Oct+Nov
Collected v Worked (Negotiated)
Lawyers only, billable time type Source: Thomson Reuters Peer Monitor
2.0
2.1
2.2
2.3
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
FTE Demand
Leverage Ratio (Lawyer to Equity Partner)
*Only 11 months (through November)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Associates (Yr 1-2) Associates (Yr 3 or more) Of Counsel Sr/Staff NEP
Leverage Composition (FTE)
*Only 11 months (through November)
30%
32%
34%
36%
38%
40%
42%
44%
46%
48%
50%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
All Segments
Profit Margin
*Rolling 12 months through Q3 2016
(i.e. Q4 2015-Q3 2016) Source: Thomson Reuters Peer Monitor
-4% -2% 0% 2% 4%
LawyerGrowth
Productivity
WorkedRates
Demand
FeesWorked
Y/Y Change YTD Nov ’16 v YTD Nov ’15
Am Law 100 Am Law Second 100 Midsize
Key Metrics by Segment
All timekeepers
Billable time type; non-contingent matters Source: Thomson Reuters Peer Monitor
Organization and Support
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MKTG and BD functions remain largely combined and centrally located
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10%
90%
MKTG and BD structurally distinct departments?
Yes No
50%
18%
8%
24%
MKTG and BD centralized?
All in one location >50% in one location
25%-50% in one location <25% in any one location
MKTG and BD budgets have increased, but fewer will increase in 2017
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8%
5%
8%
3%
42%
34%
18%
32%
24%
26%
2016 to 2017
2015 to 2016
Marketing & Business Development Budget Changes: Prior Year and Planned
Decrease 10% or more Decrease <10% Stay the same Increase <10% Increase 10% or more
2.5 %: Avg. % of firm gross revenue spent on MKTG and BD
A majority of firms have or plan to have client teams
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26%
29%
45%
Firm has client team program?
Yes No, but plan to implement No, don't plan to implement
MKTG and BD professionals feel that their function is viewed as very important by their firms
32%
34%
37%
42%
47%
47%
50%
53%
58%
58%
61%
66%
79%
90%
Implementing efficiencies through PI and PM
Recruiting effective first year associates
Developing new services
Developing new expertise
Ensuring consistent services across locations
Recruiting effective experienced associates
Enhancing management practices
Establishing innovative pricing approaches
Leveraging technology
Controlling costs
Succession planning
Retaining qualified talent to someday succeed current leadership
Recruiting effective partners
Improving business development
% indicated important initiative in their firm (9 or 10 on a 10 point scale)
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Lawyer engagement is the biggest challenge for MKTG and BD
5%
8%
16%
47%
Lack of resources
Internal firm change
External market change
Lack of lawyer engagement
Greatest business development challenge
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8%
8%
16%
18%
26%
Lack of technology-tooladoption
External market change
Internal firm change
Lack of resources
Lack of lawyer engagement
Greatest marketing challenge
Website development and public relations are commonly outsourced MKTG and BD functions
3%
3%
13%
13%
13%
53%
84%
None
Sales prospecting
Competitive intelligence research and reports
Business intelligence research and reports
Website day-to-day maintenance and updating
Public relations
Website development
Outsourced MKTG and BD functions
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Measuring Effectiveness
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Volume of activity, additional business and new clients are how most measure effectiveness of MKTG/BD
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16%
24%
47%
47%
58%
Other
We don't measure it
Number of new clients
Increase in business from existing clients
Marketing and business developmentactivities (RFPs, etc)
How MKTG/BD effectiveness is measured
Few explicitly measure ROI
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26%
74%
Measure MKTG/BD ROI
Yes
No
•Growth of top line through cross selling and number of new clients
•Point system based on attorney effort and brand impact of each activity •Track revenue related to any marketing or business development-related activity
•Revenue generated as well as new contacts
•Scorecard that includes a variety of factors
What they measure?
Some MKTG/BD activities use a high share of budget for perceived low effectiveness
18%
21%
40%
21%
26%
16%
42%
55%
5%
50%
61%
42%
74%
26%
3%
3%
4%
4%
6%
7%
7%
13%
15%
16%
9%
10%
10%
18%
Social media
Sales/BD coaching
Client interview program
Key client teams
Training for MarketingBD
CRM & data management
Business & competitve int.
Client education
Advertising
Public relations
Prospective client visits
Web strategy & presence
Existing client visits
Sponsorships
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Marketing / Business
Development Activity
Avg % of
Budget Spent % Very Effective
Competitive Advantage
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Most firms have defined their competitive advantage
82%
18%
Partners in firm have defined its competitive advantage?
Yes
No
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MKTG/BD departments play a strong role in defining and communicating the firm’s competitive advantage
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50%
50%
55%
63%
84%
Research competitors to identify their relativestrengths and weaknesses
Advise management on how to develop asharper competitive advantage
Lead/facilitate discussions on competitiveadfvantage with partners
Define the firm's distinct competitive advantage
Communicate the firm's distinct competitiveadvantage externally
Marketing/BD departments role in defining &
communicating competitive advantage
Specialization was the most frequently cited source of competitive advantage
13%
16%
21%
26%
53%
Value
Experience
Client Focus / Relationship
Quality / Premium
Specialization / Expertise
Source of Competitive Advantage
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Pricing and Efficiency
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Pricing professionals and financial analysts are the most common resources for AFA construction
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32%
18% 13%
8%
5%
24%
Provide support for developing AFAs
Pricing Professionals
Financial Analysts
Practice Management Professionals
Nobody
Marketing/BD
Other
Firms have a broad range of revenue derived from AFAs
5%
40%
13%
8%
8%
18%
8%
We have no AFAs
Don't know
21-30%
16-20%
11-15%
6-10%
1-5%
% of firm revenue derived from AFAs
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Most firms anticipate an increase in firm revenue from AFAs
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2% 32% 50% 16%
Anticipated change in % of firm revenue from AFAs over next 5 years
Decrease somewhat Remain the same Increase somewhat Increase significantly
Most firms have not implemented efficiency programs
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29%
29%
42%
Firm embraced legal process improvement?
Yes, implemented a formal process improvementprogram
No, not implemented a formal program, butintend to do so
No, not implemented a formal program and nointention of doing so
32%
26%
42%
Firm embraced legal project management?
Yes, implemented a formal approach for legalproject management
No, not implemented a formal approach , butintend to do so
No, not implemented a formal approach, and nointention of doing so
Summary
• Adaptation is the theme of the day; evolve or face extinction
• Current environment characterized by:
– Flat demand
– Declining productivity
– Eroding realization
– Modest expense growth
– Increasing cost of leverage
• Only factor driving positive revenue growth is ongoing ability to raise
hourly billing rates (and that is at risk)
• Increasing segmentation of firm financial performance requires
strategic contemplation of differentiation
• Law firm view of competitive advantage can be simplistic and may
fall short of the standard criteria: unique, sustainable and valued
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Actions
• Focus on connecting client needs and perceptions of value with firm
capabilities and deliverables
• Encourage firm leaders to make difficult decisions in the allocation of
resources and positioning of the firm (strategic prioritization)
• Advocate for spending decisions that are better aligned with actual
business-development effectiveness
• Identify ways to create a sense of urgency and achieve ownership
and buy-in (lawyer engagement continues to be a challenge
• Encourage the Marketing and BD Team leader to survey the
partnership to better align activities to strategy and expectations
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Appendix
COMPANY CONFIDENTIAL 35
Most firms are collecting company, industry and competitive data
COMPANY CONFIDENTIAL 36
63%
68%
74%
79%
Pricing
Competitive
Industry
Company
External Data Collected & Analyzed
Business Development/Marketing usually has responsibility for lawyer BD training and coaching
COMPANY CONFIDENTIAL 37
50%
45%
5%
Responsible for lawyer business development training and coaching and
client team training
BOTH Professional Development andBusiness Development/Marketing
Business Development/Marketing
Practice Group Managers
110
120
130
140
150
Q1'07
2 3 4 Q1'08
2 3 4 Q1'09
2 3 4 Q1'10
2 3 4 Q1'11
2 3 4 Q1'12
2 3 4 Q1'13
2 3 4 Q1'14
2 3 4 Q1'15
2 3 4 Q1'16
2 3Oct+Nov
Ho
urs
pe
r M
on
th
All Lawyers
Billable Hours Worked per Lawyer
Lawyers
Billable time type; non-contingent matters Source: Thomson Reuters Peer Monitor
70
80
90
100
110
120
130
140
150
Q1'07
2 3 4 Q1'08
2 3 4 Q1'09
2 3 4 Q1'10
2 3 4 Q1'11
2 3 4 Q1'12
2 3 4 Q1'13
2 3 4 Q1'14
2 3 4 Q1'15
2 3 4 Q1'16
2 3Oct+Nov
Ho
urs
pe
r M
on
th
Equity Partners Non-Equity PartnersAssociates Of CounselSr/Staff Counsel All Lawyers
Billable Hours Worked per Lawyer by Category
Lawyers
Billable time type; non-contingent matters Source: Thomson Reuters Peer Monitor
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Q1
'07
2 3 4 Q1
'08
2 3 4 Q1
'09
2 3 4 Q1
'10
2 3 4 Q1
'11
2 3 4 Q1
'12
2 3 4 Q1
'13
2 3 4 Q1
'14
2 3 4 Q1
'15
2 3 4 Q1
'16
2 3
Rolling 12-Month
Y/Y Change
Direct Overhead
Law Firm Expense
Source: Thomson Reuters Peer Monitor
40
45
50
55
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Da
ys
Avg Collection Speed Avg Billing Speed
Billing and Collection Cycles
Billable time type; non-contingent
matters
*Only 11 months (through November) Source: Thomson Reuters Peer Monitor
Respondent Profile
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The majority of respondents were from larger firms (150+ attorneys)
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21%
24%
29%
26%
30-79
80-149
150-499
500 ormore
Number of Attorneys
Most respondents had senior roles, reported to the managing partner/chairman or COO, were experienced and earned $100K to $350K
COMPANY CONFIDENTIAL 44
23%
13%
24%
40%
Other MKTG or BD role
Most senior BD officer
Most senior MKTG officer
Most senior MKTG and BDofficer
Position
8%
34%
24%
34%
Less than one year
1-2 years
3-4 years
5 or more years
Years in Role
11%
5%
13%
37%
34%
Other
MKTG and/or BDpartner/committee
CMO
COO
MNG Partner/Chairman ormost senior lawyer
Report to:
16%
16%
68%
$500K to $750K
$350K to $500K
$100K to $350K
Total Compensation
Career path perceptions are mixed
21%
29%
21%
29%
13%
45%
29%
13%
Extremely Limited
Somewhat Limited
Somewhat Defined
Well Defined
Marketingstaff
CMO role
COMPANY CONFIDENTIAL 45
Career Path
Access to conferences and associations are the most common professional development opportunities
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11%
55%
66%
92%
95%
University courses
In-house training courses
Coaching/mentoring
Access to marketing associations
Access to conferences
Professional development opportunities provided for BD and MKTG professionals
MKTG and BD FTEs have increased in the past year
8.1
9.0
12 months ago
Currently
Marketing & Business Development FTEs
COMPANY CONFIDENTIAL 47
Client service is the most common way firms seek to differentiate themselves
5%
11%
18%
21%
32%
Geography
Brand/Prestige
Industry expertise
Practice-area specialization
Client service
Primary Way Firm Differentiates Itself
COMPANY CONFIDENTIAL 48